This application relates generally to predictive techniques. More specifically, this application relates to the application of predictive techniques to transaction authorization.
Different consumers have different ways of handling their finances. Some consumers are diligent about keeping ample balances in their checking accounts, and only writing checks for payment to others that are below their known balance. Other consumers rely on float that is inherent in financial payment systems to ensure that there are sufficient funds in their account at the time that funds will be collected from the account. That is, such a consumer might write a check for an amount that is greater than the balance of his account at the moment he writes the check, but that he knows will not be subject to recovery efforts for several days. The consumer anticipates that certain funds expected to be deposited in the account will arrive before an attempt is made to recover funds from the account. The delay in attempting to recover finds from the account may be a result of mailing delays in those cases where the check is mailed and/or a result of inherent delays in the settlement process used by merchants and financial institutions. The check amount during the time it remains uncollected is referred to in the art as “float.”
Reliance on this type of float by consumers has a consequent risk that the delay in attempting to recover funds may turn out to be less than the consumer is expecting. To mitigate against the possibility of the check being declined for insufficient funds, such consumers often subscribe to overdraft-protection services so that the check will be honored. Such overdraft-protection services are generally costly to the consumer.
More recently, advances in settlement techniques have also generally shortened the float time inherent in these financial payment systems. For example, recent efforts at using check images have permitted electronic communication of check information that has resulted in decreases of check clearing time. This has also been a consequence of the recent adoption of new rules governing accounts receivable conversion (“ARC”), which is a service that allows consumer check payments to be sent to a lockbox or dropbox location for conversion into an Automated Clearing House (“ACH”) electronic debit. Similarly, recent implementations of point-of-sale check truncation have also reduced clearing time.
The effect of such reductions in clearing time have an impact on the financial practices of those who traditionally rely on float time. It is desirable to have a mechanism that would permit such individuals to continue with their financial practices without adverse impact from advances in settlement techniques.